More students are taking on crippling debt they can't repay—it's time for higher education to share the risks

Student loan debt—at almost $1.4 trillion in outstanding federal loans—has ballooned into the largest source of consumer debt after housing. An increase in student debt alone shouldn’t sound alarm bells, but debt that can’t be repaid should—and the evidence suggests that more borrowers with large balances won’t repay their debt anytime soon. This will create major hardships not just for borrowers who suffer serious financial penalties for failure to repay, but for the taxpayers left with the bill.

In a new Brookings paper that uses administrative data to look at “large-balance borrowers,” New York University’s Constantine Yannelis and I find that the share of students graduating with more than $50,000 in student debt has more than tripled since 2000, increasing from 5 percent of borrowers in 2000 to 17 percent of student borrowers in 2014. That group now holds the majority of outstanding student debt owed to the government—about $790 billion of the $1.4 trillion total at the end of 2017. Among these borrowers, we’re seeing a troubling trend: They’re repaying their loans more slowly, if at all.